Venture capitalists don’t like funding companies that have
reporters on staff. In the early days of BuzzFeed,
I had several VCs say they were interested in investing
if we could figure out a way to fire all the editors and still
run the site. I’m not joking. Tech investors prefer pure
platform companies because you can just focus on the tech, have
the users produce the content for free, and scale the business
globally without having to hire many people.

Peretti says that when BuzzFeed was raising its first round of
capital, outside of the money Ken Lerer and John Johnson had put in
initially, USV nearly invested. Fred Wilson's firm presented
Peretti with a term sheet.

"There were things they didn't love about the business. They
liked me, but they didn't like that we had editors," Peretti
said. "A lot of people [not just USV] were pro-tech, anti-human."

Peretti ended up taking an investment from SoftBank instead.
Eric Hippeau, who was a partner there,
offered him a chance to stay involved in both The Huffington Post
and BuzzFeed at the same time.

"Union Square Ventures gave me a term sheet. It wasn't like they
said, 'We never back companies with reporters,'" Peretti
clarified.

"But their thesis was strongly about a network of engaged users.
Even a company like Zynga didn't quite fit their thesis because it
required hiring creative people to make content that could
hopefully take off and be a hit, as opposed to making a platform
where everyone could create content. That's kind of the
democratic vision of what [Union Square Ventures does], and
they're an amazing firm. But there's always an initial reaction
of, 'Could you do BuzzFeed as a market for journalists to post
stuff? Then it could scale to Brazil.'

"I think Fred Wilson was involved in [financial news
site] TheStreet in its early days, so it's not like he's anti"
media startups, Peretti continued. "But there is this [general
investor sentiment that] it's hard to build a real media
business."

We asked Peretti why Union Square Ventures didn't partake in its
latest $15.5 million round of financing. Peretti said they looked
at it. "The truth is," he said, "we don't fit their thesis."

"We think Jonah is a great entrepreneur and that he has built a
great business," Union Square Ventures partner Brad Burnham said. Burnham and Wilson looked at
the BuzzFeed deal together. "We are thrilled that he is building
this business in New York. We miss great companies all the time.
For various reasons we chose not to invest in Airbnb,
Uber, and Square. Luckily in the venture
business you do not have to be right all of the time."